10.02.2008 — Throughout the '90s, many of today's premier custom retail and custom showroom dealers were selling hi-fi and home theater systems in a strictly retail environment.

They organized their annual marketing and purchasing budgets around the fourth quarter, stocking up and promoting heavily through the fall to reap the rewards of the holiday season.

They counted on December to be, by far, the biggest sales month of the year.

But times have changed.

Over the last five years, more independent specialty companies have migrated to business models based on higher ticket, higher quality home theater sales and complex whole-house systems that are custom designed and installed.

For big-box retailers, major planning and high expectations for both December and the fourth quarter remain fundamentally unchanged. But for a cross section of the country's best independent hybrid retail/custom dealers, the seasonality of the business has clearly shifted.

Importance of Holiday Season

Most custom retailers no longer bring in lower priced gifts or stock up on inexpensive systems for the holidays. That is certainly true for Leon Soohoo of Paradyme in Sacramento, Calif.

"We no longer stock traditional Christmas gift items," he says. "We cater to quality buyers who are more discriminating. They don't buy impulse gifts. "They plan out a system and take months to decide."

Gramophone's Brian Hudkins in Timonium, Md. has a similar outlook.

"Historically, the fourth quarter was all about gift buying, but for the last few years, as we have transitioned towards higher end custom sales, we see mostly two kinds of buying behaviors," he says.

"One, 'I want it done for the holidays,' which makes for a good early fall and November, and two, self-gifting, which seems to happen after couples have bought for the family and are motivated by receiving a year end bonus."

He adds, "We no longer extend retail hours during Christmas. We still need to be out there, but our message now is more about home improvement and lifestyle enhancement than gifts."

Charlie Bock of Stereo Barn in Sinking Springs, Pa. is on the same page. "Every year, the rush of Christmas sales seems to come later and later. The two weeks after Christmas are much better than the two weeks before," he says.

"It is mostly bonus-driven, combined with doctors and dentists who have had a good year and want to buy something nice for themselves. We stay with our core products and services and seem to do just fine, though video sales are clearly down in both price points and margins.

"We are hoping that the current economic downturn spurs cocooning behaviors, and we sell systems that make staying at home more fun."

Brad Smith of Audio Video Designs in Newton, Mass. points out a buying behavior that involves wives wanting to buy surprise gifts for their husbands.

"A woman will call wanting to buy her husband a Kaleidescape server for Christmas, but after an hour of consultation, she realizes it's more complex than she thought and that she'll need to involve him in the purchase, which then may not happen until January," he says.

Concludes Joe Barrett of Barrett's Home Theater in Naperville, Ill., "Because we still promote retail, December is our biggest month, though we don't extend our hours or buy in special product for the season."

"We want to come out clean at the end of the year." He adds, "We do make a point to remove several installers from the install calendar for the 30 days before Christmas so they can be available on a moment's notice for impulse ‘hang and bang' TV and surround sales."

December Shares the Stage

Many dealers concur with The Little Guy's David Wexler of Glenwood, Ill., who says, "For us, the fourth quarter is still the biggest, but it doesn't contain the biggest month, which for us is January. Last year it was November."

For Soohoo, the "big bump" of December has "moderated considerably," though he still recognizes the fourth quarter as quite strong.

Hudkins cites a very similar experience. "In late December, we see couples starting to plant seeds and begin the discovery process for new sales, which result in brisk January and February custom sales," he says.